Responses to online infringement of Intellectual Property Rights in Germany

Written on 5 Jul 2017

The problem of online infringement has already given rise to extensive jurisprudence in Germany.  Often, it is impossible to hold the direct seller responsible when an IP owner finds products infringing its rights online. Therefore, it can be necessary to take action against an intermediary such as a provider of an online shop or an internet auction platform (such as eBay), a host provider or even an access provider. However, the remedies and legal tests vary depending on the potential target, so consideration needs to be given as to where action is most likely to be effective.

Intermediary liability

From a legal standpoint, the extent of intermediary liability depends on whether the intermediary is liable:

(1) as the sole or a joint perpetrator or a participant; or

(2) if perpetration or participation are denied, as so-called “Stoerer” in accordance with the principles of the German jurisdiction about “Stoererhaftung” (breach of duty of care).

In the first case, the right holder can claim both an injunction and damages. In the second, the right holder can only seek an injunction.

According to the Federal Supreme Court (BGH), a person infringes if, assessed objectively, they facilitate or assist in the fulfilment of an infringing act by a third party despite being capable of obtaining – within reasonable effort – the knowledge that the act they are supporting infringes the IPR.

Liability can be based on any culpable (joint) cause of infringement, including taking insufficient measures to prevent such infringements. But for this to apply, a legal duty must be breached. Whether and to what extent such a legal duty exists depends on a balancing of interests of all parties involved. The assessment should weigh the right holder’s need for protection against the reasonableness of imposing on the provider a duty to examine and a duty to take action.

Online retailers and platforms

Online retailers will be liable for IPR infringements by products which third parties put in their online shop if these products are offered in the provider’s own name and for their own account. In such a case, the provider is fixed with the third party’s knowledge, whether or not they have no control over the goods being offered. The same applies when another person or company creates the product presentation on the website. A distributor who offers products in their own name with the help of an external internet platform (such as Amazon Marketplace) is also liable for IPR infringements. This liability even arises in case of content-related changes by the platform provider (provided that they are entitled to by contractual provision). Then, the distributor is under a duty to examine and monitor their offer (see BGH, Judgment of 3 March 2016, ref. I ZR 140/14 – Angebotsmanipulation bei Amazon).

In contrast, an internet platform, such as eBay, in principle does not have the same liability in relation to infringing products if the offers for sale are placed on the platform automatically and without the platform’s prior knowledge. Here, it is obvious that the provider does not offer the products in its own name.

However, there is a potential risk of enabling third parties to infringe IPRs with the help of the provided platform. Therefore, the platform provider may still be liable if it were subject to a duty to examine and that duty has been breached. The duty does not exist from the outset. Instead, according to the case law, the duty to examine arises as soon as the provider of the platform has been informed of a (factually and legally) clear infringement of IPR.

Depending on each individual case, offering a product which is covered by an IPR will only infringe if it takes place in a commercial activity. Normally, there is an exception for offers placed by a private person. If a proper notification of an infringement has been given, the provider has to 1) block the infringing offer and 2) take reasonable precautions to prevent further similar infringing acts in the future (e.g. by using filtering software to identify suspicious cases that can be controlled manually).

In principle, the same applies, in relation to electronic content (rather than goods), to a file-hosting provider which provides digital storage space. Such a provider may be liable if infringing files are made publicly available by users despite prior notice of the clear infringement of IPR. After being notified, the file-hosting provider has to prevent the same or other users from offering the identified IPR protected work to third parties via its server, as far as is technically and economically reasonable. Mere general knowledge that the storage platform is used for IPR infringements does not establish knowledge with regard to any individual infringement.

Access providers

Compared to a platform such as eBay, an access provider (such as a telecommunications provider) only provides its customers with access to the internet. Thereby, the access provider is unlikely to infringe IPR itself; it only enables access to infringements by third parties. However, according to the BGH, as a last resort, an access provider may be liable for IPR infringements but only under very strict conditions (Judgment of 26 November 2015, ref. I ZR 174/14 – Störerhaftung des Access-Providers).

Such liability only comes into question if the IP owner first undertook a reasonable amount of investigation to determine the primary parties against whom to take action and then made reasonable efforts to stop those involved who themselves committed the infringement (such as the website operator) or contributed to the infringement by providing services (like the host provider). A right holder may only file a suit against the access provider if an action against the involved parties fails or has no prospect of success. The effectiveness of potential blocking measures is assessed by the effects of the measures on the access to the specific website. Blocking is considered reasonable not only when the website consists exclusively of infringing content, but also when it contains lawful contents provided the proportion is negligible compared to the unlawful contents. Thus a German court may order blocking measures which will affect third parties’ protected subject matter if it is necessary to do so to protect the right holder.

Blocking measures can also potentially be taken against providers of WiFi, although in response to the McFadden/ Sony Music decision of the CJEU, new draft legislation was introduced in April 2017 to release WiFi providers from liability to a great extent. As an alternative, the right holder should be able to claim a blocking of access if the WiFi is used for IPR infringements. As in the case of telecommunications provider, blocking should always be a last resort and it has to be reasonable and proportionate.

IPR protection strategies

The possibility of being able to take action against a range of potential targets is an important protection given that those targets may be distributed across the world, and in some cases may be difficult or impossible to enforce against.  But this also highlights the importance of having a comprehensive IPR protection strategy. With similar (but often not identical) mechanisms and considerations applying in other jurisdictions, IPR protection strategies also need to be cross-border, so that action can be taken where it is most likely to be effective.